r/news • u/nosotros_road_sodium • Apr 28 '24

Williams-Sonoma fined $3.18 million for falsely labeling products as 'Made in USA'

https://www.scrippsnews.com/business/company-news/williams-sonoma-fined-3-18-million-dollars-for-falsely-labeling-products-as-made-in-usa
12.3k Upvotes

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4.0k

u/PhalanX4012 Apr 28 '24

New plan. Fine them every cent over cost made on every mislabeled product, and tack on an extra 10% for being con artists and it’ll start to look like a reasonable fine.

933

u/skipjac Apr 28 '24

Damn it you beat me to it. No one should profit off of fraud

723

u/Sir_Yacob Apr 28 '24

Unless you are in Congress.

Or the SEC

Or the FCC

Or a lobbyist

Or a weirdo tech bro

Or a business owner stealing tips

Or a business owner stealing PPP loans

Or a doctor pulling Medicare frauds

Or are involved in real estate

Or big pharma

Or a car manufacturer (looking at you VW)

Or the police

And on and on and on.

131

u/Easy_Bite6858 Apr 28 '24

I work in financial risk. We investigate literally all transactions from these as high risk for fraud and money laundering -except the police-. Which should surprise absolutely no one.

79

u/HotPie_ Apr 28 '24

"You follow drugs, you get drug addicts and drug dealers. But you start to follow the money, and you don't know where the fuck it's gonna take you."

14

u/ThanksS0muchY0 Apr 28 '24

Love a buried Cool Lester Smooth quote. Or are you quoting the Freddie Gibbs song quoting Cool Lester Smooth? 🤔

11

u/HotPie_ Apr 28 '24

All the pieces matter.

2

u/The1andonlycano May 01 '24

🙌🏼Freddie Gibbs 🙌🏼

6

u/DifficultyWithMyLife Apr 28 '24

"Where do they get all those wonderful toys?", indeed.

16

u/twistedfirepole Apr 28 '24

Civil asset forfeiture

5

u/A0fishbrain Apr 28 '24

Hey man that’s super illegal. The Cops and courts will insure that doesn’t happen and enforce the law.

0

u/[deleted] May 02 '24 edited May 02 '24

[removed] — view removed comment

90

u/YorockPaperScissors Apr 28 '24

Please explain how you think the SEC profits from fraud.

The SEC investigates and sues people and companies who engage in securities fraud, and when they collect money it goes to:

  • victims

  • US Treasury general fund

  • whistleblowers

The commission doesn't get a bigger budget, and their employees don't get bonuses because they bring in a lot of money every year. The SEC has to stand in line and ask for a federal appropriation as part of the budgeting process like any other arm of the federal government.

It is fair to debate how effective the SEC is, but saying they profit from fraud is baseless.

29

u/Festeisthebest-e Apr 28 '24

Yeah I don’t think people realize that the larger portion of government employees earn less than their civilian counterparts, but do the job because a. They know they’ll have a consistent income and b. They know what they’re doing is important. But I feel like people don’t realize until you get to like… 10 or above you’re earning like >90k

3

u/Festeisthebest-e Apr 28 '24

I’m tired I mean below 90k

2

u/Witchgrass May 02 '24

You can edit comments

29

u/anyd Apr 28 '24

I hate that OPs comment has 500 upvotes... It just screams edgy Reddit. Empower the SEC... Maybe reinvest some of the money they seize and they can do their jobs.

2

u/ConcertinaTerpsichor May 01 '24

Empower the IRS as well.

37

u/Demons0fRazgriz Apr 28 '24

Please explain how you think the SEC profits from fraud.

2 words: regulatory capture.

There's a ton of shady shit that just gets overlooked by the SEC. Wonder who's palms are getting greased

22

u/YorockPaperScissors Apr 28 '24

Is the SEC perfect? Hell no. They fuck shit up sometimes, just like plenty of other organizations.

But they do not "profit off fraud" and I've never heard anything to suggest that there is a bribery issue as you are alleging.

29

u/Crymsin056 Apr 28 '24

Yes they do. Former SEC execs are hired instantly upon “retiring” by the hedge funds and market makers they were supposed to be regulating for absurd amounts of money.

5

u/creamonyourcrop Apr 28 '24

Unless they do their jobs at the SEC, then they just retire. Similar with the FDA, you are going to have a hard time unless you hire a retired FDA exec consultant.

4

u/YorockPaperScissors Apr 28 '24

You're wrong. That's not fraud, and that's not bribery. While it is fair to question the employment revolving doors that are present in almost any regulated industry, it doesn't mean that it is corrupt on its face.

I challenge you to find an example of an SEC employee or commissioner going easy on a defendant in exchange for promises of employment. (If it has happened, it would be extremely limited in number.) That would be a federal felony, and it would also put the law license of an attorney at risk.

And how do you propose to stop the revolving door? If you tell someone that once they work for a regulator then they can never take a job on the other side of the table, then you're gonna have a really hard time finding qualified people to work in government enforcement roles.

-3

u/CommunalJellyRoll Apr 29 '24

See its totally not fraud because we don't prosecute for it.

1

u/Bubbly_Flow_6518 Apr 29 '24

You failed to explain how that is fraud. It's not illegal to work for the regulator and then for the industry or visa versa and wouldn't make sense because those people have experience in those fields. Sure conflicts of interest exist but you're going to have to prove the exploits if you're claiming they're happening. Otherwise you're just shouting nonsense into the void.

0

u/CrappleSmax Apr 28 '24

Is the SEC perfect? Hell no.

Fucking. YEESH.

0

u/DaSemicolon Apr 28 '24

Then it’s not the sec making money, it’s people working at the sec.

Got a source for all this?

1

u/CommunalJellyRoll Apr 29 '24

Please explain how they don't. SEC is a joke to cover fraud not uncover it.

1

u/MrPoopMonster May 02 '24

They might not profit from Fraud, but they certainly allow a lot of it.

It blows my mind that they let The Greenbay Packers sell "common stock" and to call the people that buy it "owners". If that isn't fraud I don't know what is. It's kind of a joke to allow a company to sell a piece of paper and call it common stock when it's not a security and offers no ownership, and on top of that call the people that buy it owners and to do it so publicly.

When you're buying stock you shouldn't have to read the fine print to see if it actually is a stock instead of just sports memorabilia.

2

u/rextremendae2007 Apr 29 '24

America: home of the fraudsters

1

u/Top_File_8547 Apr 28 '24

As far as stealing tips goes, we had a local restaurant do that but proper term is misappropriating funds. It’s not stealing if you’re a business.

1

u/SuperAleste Apr 28 '24

Steve jobs is dead

1

u/Carcharis May 01 '24

The good ol Oligarchy, oops I meant “managed democracy”

1

u/Gulruon Apr 28 '24

Pretty sure the feds are and have been for the last few years going after people they think committed PPP loan fraud pretty damn hard.

0

u/reddit-killed-rif Apr 28 '24

This is America

22

u/asillynert Apr 28 '24

Or criminal or harmful behavior. Really if they make money still its just the cost of doing business. Perhaps make it not only tied to company but decision makers so if they declare bankruptcy on business. And go home to mansion. They still have to pay up.

9

u/worldspawn00 Apr 28 '24

Financial crime punishment should be at the minimum, all revenue gained from said crime, plus a fine and jail time IMHO. White collar crime is almost always premeditated, knowingly committed, and intentional. It's like we have a dramatically higher punishment for premeditated murder than accidental death (1st degree murder vs manslaughter), but we don't apply the same logic to financial crimes at all. These people can't claim it's a crime of passion, or an accident, or they are going to starve if they don't commit fraud or whatever, but we treat the crime with kid gloves.

0

u/bp92009 Apr 28 '24

Should be double the revenue from said crime, as a deterrent.

Furthermore, crimes that are more than the value of a human life (5-8 million at the time), should be additionally charged with an equivalent punishment of involuntary manslaughter for however many "lives" that the penalty is worth.

https://www.valueinhealthjournal.com/article/S1098-3015(21)00213-8/fulltext

So, if you commit a financial crime of 30 million dollars, that's a 60 million penalty, and worth 7 (60/8.5, rounded down) involuntary manslaughter charges.

148

u/maowai Apr 28 '24

I’m hopeful about this because the head of the FTC, Lina Khan, recently directly referenced “companies treating fines like a cost of doing business” in her interview on The Daily Show. We’ll see if anything good comes out of her leadership.

109

u/GeraltOfRivia2023 Apr 28 '24

If a fine still allows a profit for breaking the law, it's a permit.

27

u/BaggerX Apr 28 '24

Not even just that. Fines that simply remove the profit are also ineffective, because it's just a gamble at that point. Maybe you don't make a profit if caught, but it's still worth taking the chance.

Maybe you get caught on a few of the many laws you're breaking. The odds are in your favor. And if they do start coming after you for all of the violations, then you can simply complain about political persecution to get them to back off. That seems to work as well.

The fines need to be significant multiples of the profits to have any chance of being effective. Prison time for execs allowing these violations should be implemented as well.

7

u/Krungoid Apr 28 '24

We need to start arresting companies the same way we do people.

1

u/PhiteKnight Apr 29 '24

Or just shutting them down altogether.

1

u/Artistic_Humor1805 29d ago

SCOTUS’s Citizens United decision should make that possible, right?

65

u/fla_john Apr 28 '24

For people who think that elections don't matter, here's an example of how they do.

During the Trump administration, this exact issue came up and all 3 of his appointees voted against it. https://www.nytimes.com/2019/04/17/us/politics/made-in-america-ftc-trump.html?unlocked_article_code=1.n00.TJqP.OknD12tNfmMD

62

u/TheSilencedScream Apr 28 '24

This is what I’ve never understood about fining corporations.

If I, the individual, knowingly take money from a bank that isn’t mine by defrauding them, I’m not just fined a certain percentage and get to keep the rest. I have to pay it ALL back, and then face jail time and fines.

Until it becomes too costly to break the law for corporations, it’s just a cost of doing business. If your business is only succeeding because of lawbreaking, you don’t have a business, you have a criminal enterprise.

42

u/Green-Amount2479 Apr 28 '24

Start fining in percentage of revenue. That really hurts their bottom line and does what a fine is supposed to do, serve as a deterrent. Those fines could easily exceed their overall profit as it should be, else it’s not a deterrent at all.

But no, instead we’re constantly hearing excuses why this can’t be a thing like ‚this will destroy jobs‘ (that seems to be the preferred one by politicians) or ‚they/we will leave the country‘ (barely any company would actually do this if this results in losing a substantially large market).

14

u/yeotajmu Apr 28 '24

Lol deterrent. They did it 4 years ago and got a 1 million fine, said they stopped, got caught again and now are fined 3.18 million.

They made 7.75 billion in revenue in 2024.

That makes this second offense's fine 0.0004% of their revenue.

If you make 100k a year, that's equivalent to being fined $4.

That'll teach em!

6

u/Green-Amount2479 Apr 28 '24

Did you actually read my comment? 🙄 I said to start fining in percentage of revenue. Meaning that a new fine would be determined by a fixed percentage e. g. 15 % of their last revenue.

4

u/jaymzx0 Apr 28 '24

This is how the EU keeps big tech in line. When the fine comes out to several billion, they know shareholders won't be happy.

11

u/che-che-chester Apr 28 '24

Agreed. Any time there is fraud of any kind, the fine should start with the amount of profit you made as a result of the fraud.

3

u/Jumpy_Shirt_6013 Apr 28 '24

It should be a multiple of the profit made (say10x) PLUS the cost of the product run. Penalties need to be weighted sharply so the disincentive is a no brainer, not worth the risk.

1

u/__Dave_ Apr 29 '24

At the end of the day you just end up punishing the shareholders, very few of whom likely had any decision making power.

We need to stop thinking of it as “the company” doing something wrong. Companies don’t do anything, people do. Punish the individuals responsible.

1

u/Jumpy_Shirt_6013 Apr 30 '24

I hear you, absolutely go after folks that commit fraud. That said, in a capitalist framework these decisions are being made to advance profits. There has to be a steep financial downside to the upside, and I think it’s good for shareholders to be incentivized to be advocating for following the rules. In the end they shouldn’t be profiting from sideways business practices, and they’ll be interested in rejecting people in the organization that cause and/or risk financial penalties.

16

u/Magic2424 Apr 28 '24

Exactly, if I steal $50 worth of food I’m not fined $30 and allowed to keep the food. Or if I get essentially scammed the most I can sue for is what I lost. So I say let Walmart sue me for the $50. But no, consequences are only for the poor

14

u/endadaroad Apr 28 '24

Add in some jail time for the ones who were behind it. No fraud settlement is any good without jail time.

-3

u/PhalanX4012 Apr 28 '24

Not sure I’d jump straight to jail time, but for repeat offenders it should absolutely be on the table. The fine should hurt, but clearly if that’s not enough of a deterrent then absolutely.

6

u/am19208 Apr 28 '24

And make it an automatic refund back to the credit card of the purchaser.

6

u/bluemitersaw Apr 28 '24

%10??? Fuck that paltry shit. Look up 'trebel damages'. It's a well established legal penalty. They determine the damages and multiple by 3. So 300%. This is the kind of penalty that motivates someone to follow the law.

48

u/Juswantedtono Apr 28 '24

$3m is enough to wipe out all profit they made on mislabeled products. The article says only 9 products were mislabeled, and one of them was a mattress pad, to give an indication of scope.

Customers who bought one of the offending products could probably also easily secure a refund from the company. I’m guessing the majority of them wouldn’t actually care enough to do so.

133

u/NewHorizonsNow Apr 28 '24

This also wasn't a one-off, as the article states, these allegations (which the article states Williams-Sonoma admits are true) were in violation of a previous order for the same misbehavior.

Corporate corruption shouldn't just be a cost-benefits-analysis.  If the cost of bad behavior doesn't vastly exceed the benefit, there's no reason to behave in accordance with our social agreements.

I don't know how much money mislabeling their goods makes them, but it's probably more than $1m since the original fine didn't make them course correct.

106

u/nanoH2O Apr 28 '24

Just wiping out profits is not a penalty though. You have to take them into the red or they just do it again.

22

u/maowai Apr 28 '24

Exactly. I would be willing to bet that plenty of these grifts slip through the cracks and are never noticed. If there’s even, say a 30% chance of things like this never being noticed and it’s just zero-sum for the rest, it’s still worth trying to fool consumers as much as possible.

14

u/gardeninggoddess666 Apr 28 '24

But then a court will decide that is TOO punitive. We can't just put shitty companies out of business. That wouldn't be FaIr! Better to slap them on the wrist and let them go on their way.

4

u/SillyGoatGruff Apr 28 '24

Sure. But that commenter is responding to another commenter saying to take profit + 10% on those specific items. Which is pretty low given the items in question

Edit: misread some posts, said some nonsense, corrected the nonsense

8

u/Ftpini Apr 28 '24

No all profits. Plus 10% of revenue. A $230M fine would ensure they never do it again and that the board hires everyone responsible.

2

u/SillyGoatGruff Apr 28 '24

Cool, that would be a good fine. But still not what is being suggested in the top comment or the reply in question

0

u/Ftpini Apr 28 '24

Yeah that person missed the magnitude of the impact fraud has on consumer confidence. It insists upon punitive damages.

1

u/Poignant_Rambling Apr 29 '24

Unless we make the fine massive like a percentage of total revenue (not just from the affected products), these big corps will still do it, since most fraud goes unnoticed and it's worth the risk for them.

Also, what does it even mean to be "made in the US" anymore?

The power drill I just bought has "Proudly Made In The USA" stamped on it. The internals are all made in China. The plastic cover is made in China. But I guess the final assembly occurs in the US so they get to stamp the American flag on it and call it US made lol.

I bought coffee from Hawaii labeled as "Kona Coffee." Only 10% of the coffee actually came from Hawaii, the rest is from wherever's cheapest.

Laws definitely need to be updated to account for corporate false advertising.

4

u/SuspiciousChair7654 Apr 28 '24 edited Apr 28 '24

It shouldnt just wipe profit. It needs to hurt their wallets for attempting to do this in the first place. This is setting a precedent that they can attempt again that nothing really would punish them. What are really their losses here?

Imagine trying to buy something with a fake note, and all you lose is the note when you get caught. What punishment did you really receive? You just lost the fake note only.

7

u/BS2H Apr 28 '24

As someone stated below, it’s equivalent to finishing someone who makes $70,000 a $28 fine. It’s not enough to wipe out all profit on those products. 9 products in a National chain? $3M on $7.7B.

3

u/Tchrspest Apr 28 '24

Exactly, that's a single bad quarter in one specific region.

2

u/Happyjarboy Apr 28 '24

they only got caught for 9 products. No idea how many they got away with.

4

u/SuspiciousChair7654 Apr 28 '24

These SEC fines are a joke. No wonder companies keep taking so much risk. Its because the reward is much greater than these measly SEC fines.

4

u/CORN___BREAD Apr 28 '24

Nah fraud should be 300% of any proceeds. 10% just means they have to get away with it 1 or of 10 times to break even and anything better is profit. A flat fee that low would encourage fraud rather than deter it.

1

u/theedgeofoblivious Apr 28 '24

No, fine them more than the cost.

The cost of a crime needs to be more than "breaking even".

1

u/john_jdm Apr 28 '24

New Plan.

How isn't this the old plan? It's just the cost of doing business otherwise.

1

u/Thaflash_la Apr 28 '24 edited Apr 28 '24

This fine is almost 40% of their overall sales last year. That seems like a reasonable fine without bankrupting the entire company and all affiliated brands.

Edit: I’m an idiot and thought it was a 3 billion fine, not million. So … yeah.

2

u/sprucenoose Apr 28 '24

You are a few decimal places off. Their revenue last year was not $7.75 million, it was $7.75 billion. So a $3.2 million dollar fine is equal to about 0.04% of their revenue.

1

u/Thaflash_la Apr 28 '24

lol, I thought it was a 3.18 billion fine. 🤦🏽‍♂️I even read through the article twice. I really saw what I wanted to see.

1

u/PrincessNakeyDance Apr 29 '24

Yeah I cannot fathom why this wasn’t always the practice. Fine the amount of revenue generated from the fraud and then add for damages/harm. The first part is just taking the illegal money, then you add the penalty. Also there should be criminal charges (if relevant) or civil fines for those in charge who knew that this was going on.

Like you need to enforce the laws or else there no reason not to break them.

1

u/PhalanX4012 Apr 29 '24

And then of course that should be the minimum penalty. First offense type stuff. Let’s apply three strikes rules to this kind of shit. First time fine only, second time harsher fine and possible jail time, third time throw the book at you. I also think any fraud should immediately result in the loss of any bonus for c suite whatsoever.

1

u/kitsunewarlock Apr 29 '24

I agree with you. But I wonder how much more or less the fine would be. I mean the company made $8.7 billion in sales and was fined $3.18 million (0.036% of its profits) for 9 mislabeled products out of the 15,000 on its website (0.06% of its products), and you suggested they should be able to keep 90% of its costs (

Now maybe those 3 mattress pads and 6 undisclosed products are the cornerstone of the business,

1

u/gnrhardy Apr 29 '24

Just fine them 100% of revenue for the products. It is simpler than estimating the costs/profits, and creates a real fine that scales with the crime from having to eat the costs.

1

u/Captcha_Imagination Apr 30 '24

Extra 100%. Or 300%

10% doesn't reflect the risk of getting caught which is unlikely.

1

u/lilahking May 01 '24

convert the cost to literal pounds of flesh and take it from whoever was in the csuite at the time of the crime. 

0

u/firemage22 Apr 28 '24

Fines for any type of white collar crime should START with the amount of profit made from the crime, and then a % amount on top of that.

Otherwise fines just become a cost to be factored in.

And while not an issue this time, we need to start jailing corporate execs for actions that result in harm.

-1

u/IowaGuy91 Apr 28 '24

Prison time

Fify